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Transforming Guyana, Season II, Episode IX, Guyana’s New Wealth

by guyanabusinessjournal
written by guyanabusinessjournal
Unlock the potential of Guyana’s future with us!
Join the Guyana Business Journal (GBJ) & Caribbean Policy Consortium for an enlightening session on Guyana’s Fiscal Policy in the Oil & Gas Era. This pivotal webinar is part of the acclaimed Transforming Guyana Series on Wednesday, February 14, 2024, at 10:30 AM EST.
Why Attend?
Discover: Learn about the record US$5.496bn 2024 National Budget and its implications for Guyana’s economy.
Engage: Interact with a panel of distinguished experts who will share their insights on fiscal strategies for sustainable growth.
Network: Connect with industry leaders, economists, and policymakers shaping Guyana’s economic landscape.
Meet Our Panelists:
Collin Constantine: Assistant Professor and Fellow of Economics at Girton College, Cambridge.
Thomas Singh: Senior Lecturer in Economics at the University of Guyana.
Samuel Braithwaite: Lecturer in Economics at the University of the West Indies, Mona.
Justin Ram: Former Director of Economics at the Caribbean Development Bank.
Bright Simons: Founder and President of mPedigree, Honorary Vice President at the IMANI Center for Policy and Education.
Our Expert Moderators:
Terrence Blackman, GBJ
Anthony Bryan, CPC
Don’t let this chance slip by! Secure your spot now and join the conversation shaping Guyana’s trajectory in the era of oil and gas prosperity.
You can register here and share this opportunity with your network.
We look forward to welcoming you to a transformative experience.
Be well.
trb
The GBJ & CPC Team
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Exploring Guyana’s Game-Changing Gas to Energy Project

by guyanabusinessjournal
written by guyanabusinessjournal

Gas to Energy Project – the most transformational project in Guyana’s history

By Cristina Caus

December 18, 2023

 

The Gas-to-Energy project is an embodiment of Guyana’s mission to transform its historically underperforming economy, now one of the fastest growing, into a world-class and competitive environment. The GtE project represents one of the largest single-expenditure projects in the history of Guyana.

Planned as a 25-year joint venture between the Government of Guyana and ExxonMobil with a cost of approximately US$ 2 billion, the project is designed to supply natural gas from the Stabroek Block through a 12-inch diameter pipeline that will run 220km to the onshore Wales Development Zone on the West Bank of Demerara, connecting to a facility that is slated to encompass a 300 MW natural gas power plant and a natural gas liquids (NGL) plant. When completed, these two facilities will be capable of producing at least 4,000 barrels per day, including the fractionation of liquefied petroleum gas (LPG). The NGL processing plant will treat the gas to extract NGLs for commercial use, and the power plant will use the dry gas to generate electricity for domestic use. Later developments could include plants for producing ammonia and urea.

The Project is one of a kind and it consists of two phases:1.Pipeline installation coming at an estimated cost of US$1.3 billion. Exxon is going to manage the installation of the subsea pipeline on the seafloor to transport the natural gas from the Liza field to the onshore pipeline, with a minimum of 50 million standard cubic feet of gas per day capacity (mmscfd) and a maximum capacity of 130 mmscfd. and 2.The construction of the gas power plant and the integrated NGL plant, managed by the US-based partnership CH4/Lindsayca at a cost of approximately US$759 million. The project is expected to come online by the end of 2024.

In its anticipation, the Petroleum Management Programme under the Ministry of Natural Resource of Guyana, released the Gas Monetization Strategy which serves as a discussion paper for citizens and experts to share their opinions with the government on the project and the strategy to manage Guyana’s substantial gas resources.

Given the size, scope and cost of the project, some are skeptical and find it difficult to determine the feasibility of it; and there are aspects that need to be analyzed.

Is Guyana truly ready for a project of this scale?

Resource wise – yes. The Guyana-Suriname basin is known to contain large amounts of natural and associated gas as well as crude oil. Gas accounts for about 25% of the 11bn barrels of oil equivalent (boe) in recoverable reserves discovered at Stabroek. According to estimates, the proved gas reserves are at 17 trillion cubic feet (tcf). , The associated gas is currently used for pressure maintenance and enhanced oil recovery, but it is considered to be trapping a substantial quantity of oil, therefore limiting the oil exploration and production capabilities as well.

Infrastructure-wise Guyana hasn’t been ready for this sudden oil and gas turn of events to start with. The country was in a similar dilemma a few years ago when it started offshore operations. It didn’t have the adequate infrastructure, financial and workforce capability to embrace this sprouting industry and that’s where a leap of faith was required. Up to date, ExxonMobil and its contractors spent more than US$900 million with locals since the first discovery in 2015. By the end of 2022, the company and contractors employed over 5,000 Guyanese workers, representing more than 65 percent of the overall workforce in the local oil and gas industry.

With no experience or offshore infrastructure, Guyana just in four years managed to have acquired two FPSOs (at an approximate cost of about $1B each) actively operating in its deep waters, with one more expected to be delivered by the end of 2023 and three more targeted by the end of 2027. That’s a total of six floating production storage and offloading vessels, quite an impressive portfolio of assets for a beginner like Guyana, and a solid investment for a supermajor like Exxon. This agile responsiveness to its petroleum infrastructure and workforce needs integrated with foreign partnerships, investments and skills transfer is a harbinger of how Guyana can manage complex infrastructure projects, such as the Gas to Energy one and how competitive it can get on the global market.

The costly infrastructure investments if coupled with the right maintenance practices have a quite long lifespan, between 30-50 years for the Gas power plants and the NGL plants and an average of 50 years for the natural gas transmission pipelines; long enough to pay off the hundreds of millions of dollars it takes to build them and longer in comparison for example with the solar power plants that on average would last 25-30 years, wind farms that have an expected lifetime of around 20 years, while energy storage last roughly 10 years.

Financially wise – yes, but this requires caution. In the past two years the global events have been favoring the commodity prices therefore creating more oil revenues for the oil producing economies, including Guyana, who has pocketed about US$1.24 billion in revenue from oil sales and royalties annually since first oil production in 2019.

The key to economic stability for a country is a balanced wealth management and distribution strategy. Often happens that developing countries who get blessed with wealth from resources initiate generous spendings, expensive projects and acquisitions which mostly lead to exaggerated loans and burdening debts. That’s the case of many oil exporters, eight out the top 35 net oil exporters from 1979 to 2010 have defaulted on their debt during that period, some of them are Argentina, Sudan, Iran, Iraq, Russia, Mexico, Egypt.

While considering a project of this scale, it is important to pay attention to maintaining a good-debt-to GDP ratio. The relationship between abundant fossil fuel reserves and rising debt is no coincidence and many of the countries facing debt distress have significant oil and gas reserves. Many oil exporting economies get trapped in this vicious cycle where they benefit from increasing oil revenues which increases the value of their reserves and boosts their credit ratings, enabling them to get more loans, when the oil prices drop the debt is heavier pushing the economy to expand the fossil fuel sector more and rely more on the revenues it generates, which gets attractive for creditors but becomes a heavy burden for the economy, as it gets more indebted. As a rule of thumb, a good-debt-to- GDP ratio is usually under 60 percent. Guyana was at 27.80 percent in 2022, expected to reach 30.00 percent of GDP by the end of 2023. According to the IEEFA Guyana’s debt will skyrocket from US$621 million in 2023 to an overwhelming US$1.7 billion in 2027, primarily fueled by the Gas-to-Energy initiative. On the other hand, Guyana’s GDP is forecasted to see a tremendous growth as well, reaching US$ 29.94 billion by 2028, placing it somewhere in the 58% debt to GDP ratio.

The Oil & Gas Debt

Vicious Cycle

Figure: The relationship between abundant fossil fuel reserves and rising debt

If we are to do a quick math around the Gas to Energy project, the pipeline installation by Exxon will commit Guyana to pay annually for the next 20 years a fixed rate of US$55 million to Exxon, this amount is the amortized cost of US$1 billion for 20 years at a discount rate. The natural gas and the LNG plant facilities are to be financed by the government, for 2023 about $US 200 million were allocated from the budget while the other portion of approximately US$646 million is pending financial approval the government is seeking from EXIM.

The flip side of the coin is that currently about 90 percent of Guyana’s power generation capacity comes from heavy fuel oil. The GtE project would be saving about US $11 million that is used to pay for fuel every single month in addition to reducing electricity prices by an estimated 50 percent, which currently is at a rate of 15 US cents per kilowatt hour. Also, according to the Winston Brassington, Head of the Gas-to-Energy Task Force, it is estimated that the commercialization of the excess NGLs will earn Guyana about US$100 million per year, providing the revenues to meet the annual payments and make a profit.

We should also consider the potential revenues from branching out the GtE project as highlighted in the Gas Monetization Strategy. The production of fertilizers, such as ammonia, can contribute enormously to the diversification of the project and the economy. Natural gas is the primary feedstock for ammonia, the building block for all nitrogen fertilizers, and accounts for 70-90% of production costs. If we take a look at the fertilizer market, it is roughly increasing by 12 percent compared to the previous years and it is forecasted to surpass US$ 240 billion by 2030. Trinidad and Tobago can serve as a good example of how profitable it can become, as in 2021, T&T exported US$1.74 billion in ammonia, the most exported product in the country and placed the nation as the second largest exporter of ammonia in the world. The Russia- Ukraine war has destabilized the fertilizer market globally, as they both were large fertilizer producers, therefore creating an opportunity for newcomers as Guyana.

There has been constant discouragement addressed by some global organizations and individuals towards Guyanese pursuit of its fossil fuels resources from the beginning. The kind of” in the right place at the right time” opportunity isn’t presented every day and wouldn’t Guyana have taken the risk to invest in its oil exploration and production it would not become the fastest growing economy in the world in few years only blessing its citizens with a phenomenal GDP per capita growth from about US$6.950 in 2020 to $US 20.000 in 2022 with a forecasted 80.74 percent continuous increase to about US $37.000 by 2028.

Some are worried that this project will indebt the country for many years to come and some even claim, as the U.S. based Institute for Energy Economics and Financial Analysis (IEEFA), that the project is “unnecessary and financially unsustainable”,  advising that Guyana could use its oil profits for a reliable, low-cost rooftop solar solution that would save billions while providing low-carbon electricity to the entire country.

Renewable energy is indeed a good solution developed in parallel, however it is an intermittent variable power and it needs to be balanced with a stable and reliable source, such as the natural gas, which is a low-carbon energy source compared to current HFO being used. Moreover, renewable energy, as solar suggested by the IEEFA, would address a portion of country’s economic challenge, which is energy generation, however, would not create the other economic opportunities as some described earlier.

The massive economic growth in Guyana is creating a huge demand for energy supply and for serious investments in grid modernization, transmission lines and substations for integration. Nevertheless, the fact that Guyana has natural gas in abundance should be considered as a step towards diversification of its energy portfolio and energy security and transition plans, while combined with renewable energy projects. A healthy approach is required that considers economic expansion into new sectors, development of new projects, reliable partnerships and investments that align with country’s needs and global market demand in a sustainable and financially sound way.

Cristina Caus is an International Economist and Oil and Gas/Energy Consultant and Business Developer. She has a rich, over a decade experience in the oil & gas industry worldwide and holds a master’s degree in international business from FIU.

 

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WRINKLES IN THE PETROVERSE

by guyanabusinessjournal
written by guyanabusinessjournal

 

WRINKLES IN THE PETROVERSE

by

Dr. Tulsi Dyal Singh

 

The Petroverse is showing wrinkles

crow’s feet around its eyes

furrows on its forehead

and fine lines on its face

that no amount of cosmetology

can hide from revelation.

 

And what happens in the Petroverse

echoes exponentially in Guyana

as it learns to tame the ropes

that pull from varying directions

at the idiosyncrasies of a market

that is always unpredictable.

 

A Major Shakeup in the Ownership

The landscape of Guyana’s nascent petroleum industry was significantly altered in October 2023 when Chevron Corp announced its intended purchase of Hess Corporation. Earlier in the month, it was altered too, though less directly, when ExxonMobil announced its acquisition of Pioneer Natural Resources. ExxonMobil and Hess together own 75 percent of the triumvirate which owns the mineral rights to Guyana’s Stabroek block. The Chinese company CNOOC owns the other 25 percent. ExxonMobil owns 45 percent and is the operator of the Stabroek Block.

 

These ownership changes point to changes in the priorities that buyers and sellers constantly monitor and respond to in the ongoing business of enhancing shareholder value and returns, in a fast moving and often unpredictable Petroverse. While Guyana is the sovereign owner of the Stabroek block,

the real decision makers are the major international oil corporations that have acquired the mineral rights, have the financial resources and the technical and technological expertise to bring the oil and gas to the surface, ready for monetization. Guyana is mostly a bystander while it receives its two percent royalty and guaranteed 12.5 percent profit share until the corporate investors have recovered their capital outlays.

 

John Hess, the Chief Executive Officer of Hess Corporation was the most vocal cheerleader of Guyana’s oil, as he promoted: the promises of Guyana’s bountiful oil reserves; the advantaged exploitation agreement they had obtained; the pliability of their counterparts in Guyana; the ease of securing environmental passes; contracting with deep water drillers at the bottom of a low-cost cycle; crunchy, porous rocks laden with high quality Brent oil; and one of the lowest breakeven costs in the oil industry. Hess’ stock price reached its highest point ever as the corporation’s profit soared. So, why did he sell, at this time, to Chevron?

 

Significance of the Sale

The sale of Hess to Chevron involves much more than its Guyana’s assets but several industry observers have cited its stake in Guyana’s Stabroek Block as the crown jewel of its treasury. While the high price and the healthy premium over that price are obvious factors to motivate a sale, are there other factors that could have loaded the dice?

 

Financial Demands of Carbon Capture, Removal and Storage

 

Fossil fuels have brought incalculable benefits to mankind in the last two centuries as they powered the machinery and technologies that shape our lives today. But their production and consumption also generated petro-toxins, the most damaging of which has been carbon dioxide in the atmosphere. It is now generally accepted, even by the major oil corporations which initially denied its deleterious effect on the environment, that carbon dioxide is in fact, a major cause of climate change; and that drastically reducing carbon dioxide in the atmosphere is an environmental, moral and existential priority.

That daunting task will require: reductions in the production and consumption of fossil fuels; accelerated development and utilization of alternative renewable sources of energy; capture of carbon dioxide at the sources of generation; active removal from the atmosphere; and long term storage of the captured and removed carbon dioxide underground, undersea, in seaweed farms or conversion into nontoxic or even better, into beneficial agents. This is a very expensive task and technically demanding.

In the Petroverse of the 2030’s and beyond, can stand-alone oil producers compete with the deep pocketed major oil companies who already have a head start and who have tight connections in Washington, DC and have access to taxpayers dollars under the guise of research, experimentation and development through tax abatements, incentives and grants? Chevron and ExxonMobil are much closer to the biggest trough than Hess! I believe that a strategic exit now, especially at the high end of the valuation graph was a formidable reason the sale.

Recoverable Reserves – ?

The exuberant announcements of increases in the recoverable reserves in the Stabroek Block, in the billions of barrels of oil equivalent, have gone silent. The last estimate was 11 billion barrels of oil equivalent, and it was made more than a year and a half ago, even though eight new finds have been revealed without any change in the estimated recoverable reserves. Why? Have the new discoveries not added significantly to the cumulative total? Or, have the new discoveries only replenished the oil that is currently being extracted as rapidly as possible? Or were the initial estimates too high? Or, is there a new corporate policy to limit or delay publication of this information? Surely, both buyer and seller know the answer, but whatever is the answer, was that a factor in this sale?

The Unfriendly Neighbor, Venezuela

Guyana’s neighbor to the west is Venezuela, the country with the largest petroleum reserves in the world. At over 300 billion barrels of recoverable reserves, it dwarfs Guyana’s current 11 billion barrels. Venezuela has a very active, ongoing and ominous boundary dispute with Guyana, claiming about two thirds of the land area of Guyana as its territory. This boundary was settled more than a century ago but has flared up intermittently by Venezuela, sometimes with belligerence. Venezuela has called a national referendum for December 2023, in Venezuela, to justify continuing its spurious claim. The result of the referendum is a foregone conclusion and will likely have the only effect of galvanizing Venezuelan jingoism.

There is an open case related to the boundary, currently before the International Court of Justice. It has been dragging on for several years, largely because of non-cooperation from Venezuela, an indication of the weakness of its case. More concerning, is the present build up of troops along the border. Venezuela with a population of over 28 million people has a vastly superior military establishment compared to Guyana which has a population of less than one million and a basic defense force. A sustained military operation would be grossly asymmetrical.

Venezuela and the major American international oil companies have had a contentious history over the last two decades. From producing a high of 3.7 million barrels of oil per day, its production is now less than one million barrels per day, largely because of its nationalization of American oil assets and the resulting sanctions imposed on Venezuela by the United States government. The sanctions and the resulting diminution in oil revenues have devastated the Venezuelan economy to the extent that more than seven millilon Venezuelans have departed the country. But on October 18, 2023, the US government temporarily suspended the sanctions that applied to oil and gas operations in Venezuela. Both Chevron and ExxonMobil had huge footprints in Venezuela. Chevron still has, through a special deal with Petroleos de Venezuela S.A. (PDVSA), the national oil company of Venezuela. Is this temporary lifting of the sanctions a precursor of a rapprochement between the United States and Venezuela and a harbinger of Chevron increasing its activities there and ExxonMobil’s return to Venezuela? Is that reason enough to have worried Hess? And possibly provide another reason to sell when the sailing’s good.

Will Chevron honor the existing Carbon Credit Contract between Hess and Guyana?

In late 2022, Guyana got verification of 33 million tons of sellable Carbon Credits for its rainforest carbon sink. Hess Corporation contracted to purchase US$750 million worth of it over ten years. In fact, John Hess, CEO of Hess Corp flew to Georgetown for the signing of the agreement amidst unrestrained local delight, and the first purchase, worth US$187 million, was consummated. A partial payment of US$75 million was to be paid to a special account in Guyana with the remainder to be paid over the following 18 months. This initial lot of 12.5 million tons was dubbed “legacy credits” since the were earned retrospectively, for the years 2016 to 2020, and the price was US$15 per ton. It was announced that Hess would continue to purchase 2.5 million tons per year for 2021 to 2025 at US$20 per ton; 2.5 million tons per year for the years 2026 to 2030 at US$25 per ton, making for a total transaction of US$750 million. There has not been much publicity about any further sales of Carbon Credits. But the bigger question is if Chevron will honor the remainder of the Hess Corp’s commitment to buy the remainder of credits described in the purchase agreement. At his weekly press conference on October 26, 2023, Vice President Bharrat Jagdeo announced that he was aware of the question and that he asked his staff to check with Hess and was told that Chevron will honor the contract.

The Future of Fossilenes

Despite the almost universal acceptance that fossil fuels, which I have grouped as “fossilenes”, are a potent cause of deleterious climate changes, they are still the most reliable, portable, accessible, energy dense and cheapest available form of energy available to most of the world. The development of renewable forms of energy such as wind, solar, tidal and others have not matched the urgency that is required for them to replace fossilenes on the scale and speed required to significantly lower carbon dioxide in the atmosphere. Just two years ago, it appeared that there was a massive effort to accelerate a rapid transition to renewable sources of energy but the war in Ukraine quickly stymied that and since then the world has fallen back to its most reliable and easily available sources, namely oil and gas. From a prediction of declining use of oil and gas over the next thirty years, some experts are projecting a gradual increase in the demand and use of fossilenes.

A World of Fossilenes paired with Carbon Capture, Removal and Sequestration

It appears to me that the model that the major oil companies have been targeting involves continuing to produce oil and gas while capturing as much of the carbon dioxide at emitting sources; and launch into a massive campaign to remove huge amounts of carbon dioxide already in the atmosphere. This is where huge amounts of money will be required. I see both the acquisition of Hess by Chevron and the acquisition of Pioneer by ExxonMobil as the preamble of the development of the Petroverse of the future.

Guyana’s place in the Petroverse

Guyana’s contribution to the world’s petroleum output is expected to be around 1.2 million barrels per day by 2027, or just over 1 percent, a significant number especially for a new producer with such a small population. Many financial analysts, in talking about the Hess/Chevron deal have described Guyana’s Stabroek Block as the crown jewel of Hess’ treasures. Even though Hess’ share of Guyana production accounted for less than 10 percent of Hess’ revenue in 2022, the prospects from rapidly increasing production there have encouraged some analysts to give much greater weight to Guyana’s contribution to the sale price of US$53 billion. Ranges vary from a quarter to three quarters!

A Hypothetical Value of the Stabroek Block

At a quarter, the value of Hess’ share of the Stabroek Block is US$13 billion. At three quarters, the value US$40 billion. At a half, the value is around US$27 billion. It is tempting then to impute a current value of the entire Stabroek block. Since Hess owns 30 percent of the Stabroek block, a range of US$50 billion at the low end to US$150 billion at the high end can be imputed. As always, this is about oil and gas. Who can predict the Petroverse?

 

About the Contributor

 

Dr. Tulsi Dyal Singh is a Guyanese-born American. He is a Past President of the board of trustees of the Permian Basin Petroleum Museum, Library, and Hall of Fame. He has degrees in Medicine from the University of the West Indies, a Masters degree in Health Care Administration from Trinity University, Texas; and is certified as a bank director from the Southwestern Graduate School of Banking in Texas. He has lived in Midland, Texas, for more than forty years.

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Navigating a Changing Guyana: Pathways to Prosperity in the Era of Oil and Gas

by guyanabusinessjournal
written by guyanabusinessjournal

Guyana stands to earn tens of billions of US dollars over the next two decades from developing the burgeoning oil and gas sector. What does this mean for Guyana and, importantly, the hundreds of thousands in the Diaspora? What are the pathways to our collective prosperity? To answer some of these questions, The Guyana Business Journal & Magazine (GBJ), the Caribbean Policy Consortium, and Manchester Trade Inc., with the support of Guyana SPEAKS, and  The Guyana UK Social Development Association will host a public forum Navigating a Changing Guyana: Pathways to Prosperity in the Era of Oil and Gas, a free public forum on Wednesday, August 16, from 5:00-9:00 p.m. at Chancellor’s Hall, Senate House, University of London.

This event will bring together experts from the private and public sectors in Guyana and the Diaspora to engage the audience and share views on these questions. Representatives of ExxonMobil will share a UK Diaspora Oil & Gas Update, and our two panels examine the Moment and the Opportunity for Guyana, and Emerging Business imperatives.

Confirmed panelists include:

  • Mr. Carl Greenidge, Former Minister of Foreign Affairs and Advisor on Borders
  • Mr. Allistair Routledge, President, Esso Exploration and Production Guyana Ltd
  • Dr. Riyad Insanally, Former Guyanese Ambassador
  • Dr. Juanita Cox, Guyana SPEAKS
  • Dr. Rosh Khan, President – ACE Consulting Group, SocialRank Media, Masterclass Institute (FranklinCovey Guyana)
  • Mr. Faizal Khan, Chairman, British Chamber of Commerce(BritCham) Guyana

The event will be live-streamed here

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Navigating a Changing Guyana: Pathways to Prosperity in the Era of Oil and Gas, Wednesday, June 21st, 2023

by guyanabusinessjournal
written by guyanabusinessjournal

Guyana stands to earn tens of billions of US dollars over the next two decades from developing the burgeoning oil and gas sector. What does this mean for Guyana and, importantly, the hundreds of thousands in the Diaspora? What are the pathways to our collective prosperity? To answer some of these questions, The Guyana Business Journal & Magazine (GBJ), the Caribbean Policy Consortium, and Manchester Trade Inc., with the support of the Institute of Caribbean Studies, will host a public forum Navigating a Changing Guyana: Pathways to Prosperity in the Era of Oil and Gas, a free public forum on Wednesday, June 21, from 5:00-7:00 p.m. at The Gathering Spot 1720 I St NW, Washington, DC 20006)

Register today at http://bit.ly/3N5sBSf

The free event brought together experts from the private and public sectors in Guyana and the Diaspora to engage the audience and share views on these questions. Representatives of ExxonMobil shared a Diaspora Oil & Gas Update, and our two panels examine Educational, Environmental, and Emerging Business imperatives.

Panelists included Dr.Ivelaw Griffith, Dr. Riyad Insanally, Dr. Ulric Trotz, Tamara Maxwell, and Oslene Carrington.

Please view the live stream here

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Understanding the Mystery of Climate Finance: Addressing Concerns and Finding Solutions

by guyanabusinessjournal
written by guyanabusinessjournal

Addressing Concerns and Finding Solutions to Climate Finance

By

Dr. Ulric Trotz

May 2, 2023

 

 

Two recent developments on the climate finance landscape cause me some concern.

The first is the agreement at the 2022 Conference of the Parties (COP) of the United Nations Climate Change Convention (UNFCCC) in Egypt, where after years of unrelenting representation by developing countries, agreement was finally reached for the establishment of a Loss and Damage Fund.

Guyana along with other CARICOM countries, as part of the negotiating block of the Association of Small Island Developing States (AOSIS) for the United Nations Framework Climate Change Convention have been unrelenting in their advocacy for the provision of financial resources to support their efforts to adapt to and to mitigate climate change impacts.

Developing countries have argued that their contribution to the global Green House Gas budget is minimal, compared to that of developed industrialized countries but that they are in areas where they are exposed to the consequences of excessive GHG emissions. Now that there is agreement for global action to meet the requirements of the Paris agreement, the need for financial resources at a scale and in a time frame that allows countries to adapt to climate change and to achieve the net zero carbon emissions status, through the transformation of the architecture of their energy systems is of paramount importance.

As a result of the persistent advocacy of developing countries agreement was reached at the Cancun climate meeting in 2009 to establish the Green Climate Fund (GCF) as the Financial Mechanism of the UNFCCC, with a recommendation that it would be capitalised at the level of $100 billion US dollars per year. The Fund had its first full year of operation in 2016 with the approval of thirty five projects worth $1.5 billion US. To date, however, the $100 billion US capitalisation has not been realised.

Loss and Damage became an issue as a result of the concern by developing countries of instances, where, despite efforts at adaptation to climate change, residual Loss and Damage could be experienced and, in such cases, resources would be needed to address the residual Loss and Damage incurred.

The issue was first flagged in the Bali Action Plan, an outcome of the climate change negotiations in Bali in 2007. No concrete action to address it was agreed to until the climate change meeting in Poland in 2013. Constant advocacy by developing countries resulted in inclusion of the issue in the Paris Agreement (2015) in Article 8, which called for action to address Loss and Damage but made no mention of the resources needed to address same. There was no movement on this issue until the negotiations at the climate meeting in Glasgow in 2021, when developing countries further pressed for action on Loss and Damage. This effort culminated in the decision in 2022 at the Egypt meeting to establish the Loss and Damage Fund, some fifteen years after the issue was first laid on the agenda of the global climate change negotiations.

My concern is now that the decision has been made to establish the Fund, it is going to take an eternity to decide the level of funding, who pays, who is eligible to draw down on the fund and the terms of engagement and modalities for accessing the fund.  Already, questions are emerging on whether China should be a beneficiary, ridiculous given their level of development and culpability, or a contributor to the fund.

Add to this our experience with the Green Climate Fund (GCF), which as stated earlier was agreed to at the Conference of Parties (COP) for the Climate Change Convention in Copenhagen in 2009. Up to now in 2023, although finally operational in 2016, the Fund has not realised the intended capitalisation at a modest $100 billion US per year– this when recent estimates call for a $4 trillion US per year for global adaptation.

I don’t see the proposed Loss and Damage Fund performing better. Even when the Loss and Damage facility becomes operational, I fear that the same arduous efforts to get access to existing climate funds (GCF, GEF, Adaptation Fund) will prevail and it remains very unlikely that sufficient funding will ever be found. I am not optimistic about the availability of climate finance at the scale and in the time, frame required by poor developing countries to support their own efforts to build climate resilience against the existential and projected climate change.

Our countries have to learn that their best bet for their climate resilience programme is to dig deep into their own resources and start the process now, because waiting for climate finance to materialise and at the level that makes a difference, is like waiting for Godot.

This is precisely the situation facing poor developing countries like Guyana and Suriname that have recently discovered large oil and gas deposits in their offshore areas and in the case of Guyana, moving rapidly to exploit these resources. Both countries are already experiencing the negative impacts of climate change which is posing a serious threat to their developmental aspirations. Revenue derived from the exploitation of their oil and gas deposits can be utilised to address both their climate adaptation and mitigation requirements and place them firmly on the path to achieving both a climate resilient and zero carbon development pathway.

Failure to address the climate resilience challenges facing poor developing countries to existential and projected climate change and doing so in a time frame that takes into account the recent call for urgency of global action in the IPCC Assessment report, will lead to the disruption of their economies, livelihoods and their way of life.

The second issue that causes some concern is the recent entry of the International Monetary Fund (IMF) into the global climate finance landscape. It was recently announced that Barbados has accessed the IMF’s new Resilience and Sustainability Facility (RSF).  The stated purpose of the RSF is to “provide financing to support the country’s climate change adaptation and mitigation efforts, and support Barbados’ ambitious goal of transitioning to a fully renewable-based economy by 2030”.

 

As I understand it, developing countries can now use this facility to access “loans” to finance local climate change adaptation and mitigation efforts. After fighting for years at successive COPs to establish the fact that climate funds for adaptation must be made available to developing countries as grants, the IMF arrangement will instead have countries accessing concessional loans for this purpose. This flies in the face of what was the common understanding about finance for adaptation under the United Nations Framework Convention on Climate Change (UNFCCC).

 

Even for the Green Climate Fund, it was understood that 50% of the funding will be for grants for adaptation. For years developing countries have been espousing the principle of grant financing for adaptation, but the IMF conditions for accessing climate finance is contrary to that principle.

 

The distressing thing for me, an octogenarian, who for the last two decades has been in the trenches trying to get financial resources for adaptation in the region, is that part of the package for concessional loans includes a ten year moratorium on first repayment. What that means is that those of my generation will be incurring debts for building climate resilience that would be paid back by our children and their progeny.

 

Further, the sums being made available globally do not allow countries to implement climate resilience measures at the scale required and simply do not compare to what countries like Guyana stand to extract from their own resources. As we say in the Caribbean, “That’s not cricket!”

 

Developing countries are already experiencing the severe impacts of a changing climate and are well aware of the interventions that need to be taken to build resilience in their communities and critical socio-economic, human and natural systems that sustain livelihoods. There are several examples across vulnerable sectors of successful interventions to deal with adaptation, many of them at the pilot scale that need scaling up to be impactful. Unfortunately, the resources to do so are not forthcoming.

The present modalities that are required to access Climate finance do not reflect the need for urgent global action and needs to be further expedited.

One can make a strong case for an investment in the energy sector as the Internal Rate of Return on Investment (IRRI) is favourable and would attract private sector investment. Building climate resilience through implementing measures to protect coastal resources, water, health, agriculture, tourism and livelihoods in many cases, require addressing the provision of a public good (e.g., restoration of a degraded mangrove ecosystem or watershed), and should not be viewed solely through a lens of a traditional investment and hence the notion of grant funding becomes relevant.

The IMF should consider a generous grant funding window that would support adaptation in those areas that are unlikely to attract private sector funding but are critical for the survival and wellbeing of the community.

Over the past twenty six years CARICOM countries have worked assiduously to develop an accurate knowledge of how regional climate is changing, what future climate is likely to be,  the vulnerability of  our natural , human and socio-economic systems  to existential and future climate change, measures to be taken to address that vulnerability, implemented some of the latter to deal with climate change challenges to our water, agriculture, coral reefs, mangroves, settlements, infrastructure (adaptation)  on a pilot scale.

The region has also taken several initiatives to start the process of implementing the changeover to renewable energy (mitigation). As a region we need to accelerate the scaling up and implementation of these interventions and access to adequate resources in the required time frame is a sine qua non for successful climate change adaptation and mitigation in the Caribbean. Under the circumstances poor developing countries like Guyana and Suriname are left with no option but to fully utilise their newly found oil and gas resources to support their transition to a zero carbon status and build the climate resilience required to ensure their survival in the face of present and projected impacts from a changing climate.

 

 

Dr.Ulric Trotz, formerly the Science Adviser at the Caribbean Community Climate Change Centre in Belize, is a highly accomplished and knowledgeable scientist who has made significant contributions in his field. He has held various leadership positions throughout his career, including Director of the Science & Technology Division at the Commonwealth Secretariat, Secretary of the Commonwealth Science Council, and Science Adviser to the Commonwealth Secretary General. He has also served as Secretary-General of the National Science Research Council in Guyana and as Dean of the Faculty of Natural Sciences at the University of Guyana. From 1980 to 1991, Dr. Trotz was the Director of the Institute of Applied Sciences and Technology in Guyana.

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CommentaryEnvironment

Mapping Guyana’s Path Between Climate Change and Energy

by guyanabusinessjournal
written by guyanabusinessjournal

Mapping Guyana’s Path Between Climate Change and Energy

A reflection Ulric Trotz’ White Paper
By Scott B. MacDonald
April 19, 2023

Climate change and energy transition have converged as the two major forces shaping the world in the early 21st century. In the Caribbean, the newly minted petro-state, Guyana, finds itself pulled by both forces, a subject adroitly tackled by Ulric Trotz, former Science Advisor to the Caribbean Community Climate Change Centre in Belize. Sponsored by the Guyana Business Journal and Caribbean Policy Consortium, Trotz’s white paper, On the Intersection of Energy Development and the Environment in Guyana, is timely and on point.

Prior to the 2015 discovery of oil and gas reserves Guyana was regarded as a “poor vulnerable developing country.” As such, it became one of the persistent voices for an international accord to deal with climate change, something which helped push the global community to the Paris Agreement in 2015. Ironically that was the same year Guyana discovered its hydrocarbon wealth. Trotz makes the case that the revenues generated by oil and gas exports should be used to finance Guyana’s transition. This is particularly significant, in that without hydrocarbon revenues, sufficient financing for that transition would probably be difficult or impossible to obtain, a reality that confronts most countries in the Caribbean, many of which are heavily in debt.

Trotz argues that Guyana is working to straddle the divide between helping reduce global carbon and tapping oil and gas wealth. He has little use for the argument to leave the resources in the ground; rather his preference is to use those commodities to finance the shift from fossil fuels to renewables. Trotz believes that the energy transition is going to take time (probably longer than current timetables), financial help from the advanced economies is lagging (and may never match developing country needs), and environmental problems must be dealt with sooner than later.

At home in Guyana, the government is implementing its Low Carbon Development Strategy (LCDS) and Climate Resilient Strategy and Action Plan (CRSAP). The CRSAP places an emphasis on building climate resilient agricultural systems, enhancement and maintenance of the country’s sea defense, public health adaptation to climate change, and strengthening of drainage and irrigation systems. Equally important are measures to upgrade the country’s electricity generation and transportation systems.

The regional approach is based on CARICOM and focuses on the development of energy and food security, constructed around the “internalizing of supply chains for the inputs to support these, and by utilizing the resources from Guyana, Suriname and Trinidad and Tobago.” Thought should be given to determining “the feasibility of rehabilitating the Point Lisas petrochemical facility in Trinidad and Tobago for fertilizer production to support the food security program and other natural gas petrochemicals and explore the possibility of supplying natural gas from the Guyana basin for use by the Point Lisas facility which would avert the need to negotiate access through a pipeline from Venezuela.” Considering that Guyana, Suriname and Trinidad and Tobago are CARICOM members with substantial oil and gas reserves, they should be the countries to provide the rest of the regional membership with fossil fuels, instead of reactivating Venezuela’s Petrocaribe program.

Recent developments on this front are encouraging, including an effort for greater coordination of energy and food policies between Guyana, Suriname and Trinidad and Tobago, a sustained effort to tackle Guyanese-Surinamese issues conducted at the highest levels, and discussions over of how best to streamline regional oil and gas production. Trotz clearly falls on the side of the argument that Guyana does not need to build its own refinery as Trinidad’s refinery has been mothballed for several years. He also warns: the construction of a Guyanese refinery runs the risks “of locking in heavy emissions for years to come and end up as stranded assets at the end of the transition period.”

While oil and gas have a role to play in the transition period, Trotz believes that it is essential to develop its solar, wind and tidal power. Moreover, there should be “supporting programs for waste to energy generation utilizing domestic waste, wood waste from the sawmilling industry and rice husk from the rice industry.” To this list should be added support for a national biomass program for domestic, institutional, and industrial use.

Trotz ends his report with several recommendations, most of which are commonsensical and straightforward. The moist weight of these are to uphold the highest standards for the development and production of oil and gas; the fast-tracking of the implementation of the four priority areas identified in the CRSAP and LCDS (sea defense, drainage and irrigation, agriculture, and health care); and advancing the development of institutional capacity to monitor and regulate the oil and gas industry. Two other items stand out – the need for CARICOM to better coordinate food and energy policies and the promotion of a greater sense of ownership by the Guyanese people of the development of their hydrocarbon industry and the transition to renewables.

It is important for Guyana’s population to believe that it has a stake in the development of the national energy program, how this relates to their daily life, and how the energy transition will take place and impact them. And they need to have confidence that the wealth generated from oil and gas will be used prudently and with transparency. History can serve up many examples of how oil and gas have become a curse instead of a blessing. Guyanese have only to look next door to Venezuela, where the wealth generated by oil led to the erosion of most other economic sectors, a deep stain of corruption, and ultimately authoritarian government.  For Guyana, it is essential to get it right and Trotz provides a thoughtful discussion of the country’s options during a period of sweeping transformation.

Dr. Scott B. MacDonald is the Chief Economist at Smith’s Research & Gradings, a fellow of the Caribbean Policy Consortium and a research fellow at Global Americans. His most recent book is The New Cold War, China and the Caribbean (2022).

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CommentaryDiaspora EngagementEducationEnvironmentForeign InvestmentGovernance and TransparencyInfrastructureOil Sector Policy

From Black Gold to Green Fields: The Promise of Guyana’s Oil Wealth in Supporting Agriculture

by guyanabusinessjournal
written by guyanabusinessjournal

From Black Gold to Green Fields: The Promise of Guyana’s Oil Wealth in Supporting Agriculture

By

Dr. Carolyn Walcott & Dr. Terrence Blackman

Guyana, a small country on the Atlantic coast of South America, is in the throes of a significant economic transformation. The 2015 discovery of large oil and gas reserves off its coast completely changes the country’s trajectory. Guyana is forecasted to produce 1.7 million barrels per day (bpd) of oil by 2035. It is expected to earn billions of dollars in revenue, with some estimates suggesting that the country is likely become one of the wealthiest in the region.

However, Guyanese must know the potential pitfalls of relying solely on oil revenue, and they must explore ways to use this newfound wealth to support other sectors of the economy. One priority area deserving of amplified support is the agricultural sector. With suitable investments, Guyana’s oil wealth could catalyze sustainable farming practices, boost agricultural productivity, and transform the country into a green oasis. Prompted by Episode IX of the Guyana Business Journal and Caribbean Policy Consortium Series Transforming Guyana, we reflect on the promise of Guyana’s oil wealth in supporting agriculture and the potential challenges ahead.

(n.d.). Guyana’s Exports (2020) Total: $2.99B. The Observatory of Economic Complexity. Retrieved March 21, 2023, from https://oec.world/en/profile/country/guy

‍Oil is the backbone of Guyana’s 2023 economy. Crude oil accounts for approximately 40% of the nation’s exports. While large oil reserves have the potential to bring in billions of dollars in revenue, it also poses significant risks. The volatility of oil prices means that Guyana’s economy could be severely impacted if oil prices plummeted. Additionally, an economic overreliance on oil can lead to a neglect of other sectors of the economy, resulting in an unbalanced economy that is vulnerable to shocks. Therefore, diversifying the economy beyond oil revenue is crucial for Guyana’s long-term economic stability.

Agriculture is a critical sector that must play a decisive role in diversifying Guyana’s economy. By investing in agriculture, Guyana can reduce its reliance on oil revenue, boost its economic resilience, and create new socioeconomic growth and development opportunities.

A critical appraisal of Guyana’s agriculture sector requires retrospection, incorporating the colonial occupancy, the plantocracy, the enslaved labor force drawn from the African transatlantic slave trade, and the indentured laborers from East Asia. Guyana has had a long history of agriculture, with sugar as king. However, it was recently reported that The Guyana Sugar Corporation (GuySuCo) has set one of its lowest production targets in years. The target for the 2023 first crop has been set at 16,000 tons.  Last year’s first crop had a production target of 20,261 metric tons, but the corporation only managed to produce 13,076 metric tons of sugar. The era of sugar is over. Despite these challenges, agriculture still has enormous potential in Guyana. The country’s fertile soil and favorable climate make it an ideal location for various crops, including rice, which accounted for approximately 9% of the country’s 2020 exports, fruits, vegetables, and spices. There is also significant potential for livestock production, particularly in the poultry and dairy sectors.

Despite its potential, the agricultural sector in Guyana faces several challenges. One of the most pressing is the need for more infrastructure. Many farmers in Guyana need access to basic infrastructure such as roads, irrigation systems, and storage facilities. Otherwise, this makes it difficult to transport goods to market and store them properly, leading to significant losses. Another challenge facing the agricultural sector in Guyana is the need for more access to credit. Many small-scale farmers in the country need help to access the financing they need to invest in their farms and improve their productivity.

In a sense, the privileging of the colony’s plantation sector, above others, undermined Guyana’s small-scale farming through the lack of financing and the development of necessary supporting infrastructure for optimal production. Over a century later, the small farming sector faces real financing challenges and climate change. Senior lecturer at the University of Guyana’s Faculty of Agriculture and Forestry, Dr. Elroy Charles, has suggested that early warning systems are necessary for farmers to implement measures to mitigate climate change, even as they consider diversifying. He also believes that effective zoning is needed for agriculture, housing, and mining, as these intersect with increased agriculture production. In the meantime, the agriculturalist offered that small farmers require assistance with low-interest rates through a facility such as the now-defunct Guyana Agricultural Industrial Bank (GAIBANK).

Sustainable farming practices are crucial for the long-term health of the agricultural sector in Guyana. These practices help to preserve the country’s natural resources, improve soil health, and reduce the use of harmful chemicals. Oil revenue will be crucial in supporting sustainable farming practices in Guyana. By investing in research and development, the government can catalyze the identification and promotion of sustainable farming practices appropriate for Guyana’s unique climate and soil conditions. Additionally, by funding training and education programs, the government can help farmers adopt these practices and improve their productivity.

Agro-processing and value-added agriculture can also significantly boost the profitability of the agricultural sector in Guyana. By processing raw agricultural products into finished goods such as juice, jams, and sauces, farmers are likely to capture more of the value of their products and create new growth opportunities. Cheaper electricity—soon to be powered by natural gas and hydro—is essential for an internationally competitive food processing industry. Additionally, the government can create a favorable regulatory environment for the agricultural sector. This includes policies that promote land tenure security, protect the environment, and provide industry investment incentives.

Collaboration between the private and public sectors is crucial for supporting the agricultural sector in Guyana. The private sector can play a key role in investing and providing technical expertise. Additionally, collaboration between farmers is crucial for improving productivity and profitability. Farmers can reduce costs and improve their bargaining power by forming cooperatives and sharing resources.

A country’s resource wealth does not necessarily guarantee national development. But oil brings hope. Guyana’s oil wealth can transform the country’s economy, but it poses significant risks. Diversifying the economy beyond oil revenue is crucial for long-term economic stability, and agriculture has the potential to play a vital role in this diversification.

However, the agricultural sector in Guyana faces significant challenges, including, critically, a need for more infrastructure and access to credit. Oil revenue will be crucial in addressing these challenges and supporting development as a new agricultural sector emerges that centers its role alongside the oil and gas industry.

 

 

Dr. Carolyn Walcott is a media and communications educator and scholar with a diverse background in journalism education, international communication, and media development. She received her undergraduate degree in Communication and her Graduate Diploma in International Studies at the University of Guyana. She completed her M.A. in Communication and Development at Ohio University and her Ph.D. in Communication at Georgia State University. Her research agenda focuses on media pedagogy and practice, national identity, rhetoric, and political communication.

Dr. Terrence Richard Blackman is a member of the Guyanese diaspora. He is an associate professor of mathematics and a founding member of the Undergraduate Program in Mathematics at Medgar Evers College. In addition, he is a former Dr. Martin Luther King Jr. Visiting Professor at MIT and a member of The School of Mathematics at The Institute for Advanced Study. He previously served as Chair of the Mathematics Department and Dean of the School of Science, Health, and Technology at Medgar Evers College, where he has worked for more than twenty-five years. He graduated from Queen’s College, Guyana, Brooklyn College, CUNY, and the City University of New York Graduate School.

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CommentaryEnvironmentGovernance and TransparencyOil Sector Policy

A sustainable approach to Guyana’s economic development

by guyanabusinessjournal
written by guyanabusinessjournal

A sustainable approach to Guyana’s economic development

By

Cristina Caus

Last month, Guyana gathered leaders for a 4-day international energy conference to discuss how the oil & gas sector can harness the country’s development. Given the current global energy context, sustainability was the hot-button topic throughout the program and the conversations revolved around how can Guyana, an oil superpower in the making, explore and produce oil sustainably while remaining aligned with the world’s 2050 net-zero goals.

While some global powers, pushing their agendas toward carbon-free and clean energy projects, view the Caribbean oil hype skeptically, others are highly optimistic about the opportunities arising. Can an oil & gas-based economy be sustainable?

In a broader sense, sustainability is not an environmental-only term, as many think. It encompasses fulfilling the needs of the current generation without compromising the needs of future generations while balancing economic growth, environmental protection, and social well-being.

Since the oil & gas production rising in Guyana, the development of communities and renewable energy initiatives has been a focus for the key oil players and the government. Multiple achievements and promising plans were shared during the 2023 International Energy Conference in Guyana, all fueled by the nation’s petroleum industry.

ExxonMobil has invested in the community by partnering with local entities to engage with the community and address community challenges since 2012. The focus areas include the environment, STEM education, and women, youth and community empowerment. Over the past years, ExxonMobil Foundation invested more than US$10 million in Guyana for research, sustainable employment and conservation, collaborating with the University of Guyana to train Guyanese for sustainable job opportunities and expand community-supported conservation. The investment is also intended to support Guyana’s Green State Development Plan, the country’s 15-year development plan that aims, among other things, to diversify Guyana’s economy and balance economic growth with the sustainable management and conservation of the country’s ecosystems.[1] President of ExxonMobil Guyana, Alistair Routledge shared during the conference that the US$160 million Ogle Operations Center, in construction at the moment, is proof of long-term investment in Guyana’s prosperity and sustainability. With the latest digital capabilities, this modern center in Guyana aims to control Exxon’s offshore operations and around 130 ex-pats are now training locals to build the future workforce. The company has comprehensive mentoring programs in place to ensure that Guyanese will run the operations in the near future.

CNOOC Petroleum Guyana Limited (CPGL) has been building communities in Guyana since it started its oil & gas activities. Liu Xiaoxiang, President CPGL shared the latest news on the 130 solar lights system donation to Moraikobai, the only indigenous village in Region Five. As part of the “building the partnership bridge” plan between China and Guyana, CPGL’s CSR initiatives are selected under four main pillars: developing Amerindian communities, promoting Education, the transition to Clean and Renewable Energy, and fostering Safe and Thriving Communities. To date, CPGL has planned and implemented over 30 projects across six regions in Guyana in addition to the Greater Guyana Initiative (GGI).

The Greater Guyana Initiative is a partnership with the Stabroek Block co-venturers ExxonMobil, Hess, CNOOC; and the People of Guyana. This is intended to support communities to help develop the local workforce, build human capacity, advance education and improve healthcare, and promote sustainable economic diversification for a growing Guyana. The Greater Guyana Initiative has funded a Hinterland Poultry Project valued at more than

US $608,000 to boost the poultry industry in the hinterland regions. This project, also called the ‘Egg Sandwich Project,’ is the first regional socio-economic project funded by the GGI. It is focused on enabling the hinterland residents to raise their local poultry capacity, thereby enhancing consumer access to high-quality local poultry products and economic independence.[2]

A lot is happening in Guyana because of oil & gas “… because investing in Guyana means an investment in the region,” as the Minister of Finance of Guyana, Dr. Ashni Singh, highlighted. From investment in urban development to education projects and social infrastructure (such as the building of 12 new hospitals), the new Gas-to-Energy Project will address long-standing issues of high electricity costs. The government has allocated US $759 million for the development of the plants that are advancing this Gas-to-Energy project, set to significantly lower the cost of electricity, triggering rapid growth in industrial activity, and promoting a smooth transition to renewable energy sources countrywide.

The government has massive solar projects in store for the hinterland for 2023, part of Guyana’s Low Carbon Development Strategy (LCDS) 2030, which will benefit the coastal communities and the most remote areas. One of the initiatives funded through a line of credit of US $7.2 million from the Government of India starts this year and will include 30,000 150-watt solar photovoltaic units with batteries and lighting kits being installed in hinterland communities.

All these projects and initiatives place importance on ensuring that Guyanese across the country benefit from the petroleum sector through revenue and investments in socio-economic development, which is a sustainable approach in essence. Case in point, what the Minister of Natural Resources of Guyana, Vickram Bharrat, has mentioned, “… the big powers built their economies on non-environmentally friendly practices. These are the same rich countries so concerned about the emissions that they are trying to limit production from natural resources. However, none offer help to small economies for the renewable energy transition, which requires massive government input financially.”

Now is the time and the place for countries like Guyana to ensure security for their people and the entire region by using the petroleum industry as a ladder to a sustainable future.

 

Cristina Caus is an international oil and gas business developer and consultant and holds a master’s degree in international business from Florida International University.

 

[1] https://corporate.exxonmobil.com/news/newsroom/news-releases/2018/0702_exxonmobil-foundation-invests-us10-million-in-guyana-for-research-sustainable-employment

[2] https://corporate.exxonmobil.com/locations/guyana/news-releases/031122_greater-guyana-initiative-puts-120m-to-hinterland-poultry-project

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CommentaryEnvironment

Transforming Guyana, Episode X: Unlocking Guyana’s Oil and Gas Potential, Balancing Energy Development and Environmental Stewardship

by guyanabusinessjournal
written by guyanabusinessjournal

Transforming Guyana, Episode X: Unlocking Guyana’s Oil and Gas Potential, Balancing Energy Development and Environmental Stewardship

By

Utamu Bell & Terrence Blackman, Ph. D.

In Episode 10, “Unlocking Guyana’s Oil and Gas Potential,” in the Transforming Guyana webinar series hosted by the Guyana Business Journal (GBJ) and the Caribbean Policy Consortium (CPC), the episode explored a recent white paper on Guyana’s difficult position as a significant oil producer and its commitment to climate change mitigation.

Dr. Ulric Trotz, Dr. Thomas Singh, and Dr. Anthony Bryan were guest speakers, examining the challenges of reconciling these conflicting roles, the need to prioritize climate resilience, and the role of climate finance. The discussion also highlighted the importance of managing the environmental impacts of oil production, transparency in managing oil revenues, and the need for regional collaboration to pursue a low-carbon, climate-resilient future.

Guyana faces the unique challenge of being an oil and gas producer while remaining vulnerable to climate change. Dr. Ulric Trotz, Past Science Adviser at the Caribbean Community Climate Change Centre in Belize, emphasized the importance of utilizing oil and gas production resources to benefit the Guyanese people. He noted that the country has already begun implementing its Low Carbon Development Strategy (LCDS) through various mitigation efforts, including the gas-to-shore project, Amaila Falls, and renewable energy systems for the interior. He observed that Guyana’s small carbon footprint uniquely positions the country to build climate resilience. Climate finance, he observed, has been a major obstacle in global discussions, with current estimates falling short of what is needed to address the issue significantly.

Dr. Anthony Bryan, CPC Co-Chair, and Fellow as well as Senior Fellow at the Institute of International Relations at the University of the West Indies (UWI), highlighted Guyana’s President’s commitment to using the oil windfall to diversify the economy, improve access to social services, and promote investment in non-oil sectors such as agriculture, tourism, and manufacturing. Dr. Bryan noted that, as a developing country, Guyana has the resources, influence, and global attention to contribute to the international climate agenda, and he also called for developed countries to rebuild trust and confidence in international cooperation to make progress on climate mitigation and development goals.

Dr. Thomas Singh, Director of the GREEN Institute and Senior Lecturer within the Department of Economics at the University of Guyana, stressed the importance of using public policy incentives to drive desired environmental outcomes, especially in the transition to renewable fuels. He suggested shortening the horizon for the extraction of associated gas instead of allowing it to run with the timetable of oil extraction.

The resource boom from oil and gas production in Guyana presents an opportunity to develop local and foreign skills to handle the demands of a world-class economy. Dr. David Lewis, CPC Co-Chair, highlighted the pressing need to advance the skills base and focus on institutional and human capacity development to successfully manage oil and gas growth. He proposed strengthening government, private sector, and civil sector society capabilities. “The excuse can no longer be, ‘there is no money. There is money at the government level and the private sector level. The challenge now is can we use those resources adequately, properly, and in a timely manner to build up this capacity which is needed”, Dr. Lewis said.

Guyana’s low-lying coastal plains are particularly vulnerable to sea-level rise. Climate change will inevitably have a significant impact on Guyana. In 2014 the Caribbean Planning for Adaptation to Global Climate Change Project sounded the alarm that: “the entire fabric of Guyanese society—population, agriculture, industry, and infrastructure—is vulnerable to even slight increases in sea level rises, Guyanese must be prepared to adapt to natural disasters. One recalls the floods of 2005 when heavy rains left two-thirds of Guyana’s capital, Georgetown, flooded, affected over 120,000 people, and killed six. Over 40% of Guyana’s population lost some or all of their possessions, and an outbreak of Leptospirosis added to the death toll.

Preparation requires resources; thus, Guyana must aggressively exploit its oil and gas resources as it simultaneously addresses climate change concomitants. By harnessing its resources and influence, Guyana can develop its economy, contribute to, and shape the global climate agenda, and strengthen its capacity to adapt and to be resilient in this era of climate change.

Episode XI will premiere on Wednesday, April 12, and broadcast live via the GBJ Facebook, YouTube, and other social media platforms.

Dr. Terrence Richard Blackman, associate professor of mathematics and a founding member of the Undergraduate Program in Mathematics at Medgar Evers College, is a member of the Guyanese diaspora. He is a former Dr. Martin Luther King Jr. Visiting Professor at MIT and a Visitor to The School of Mathematics at The Institute for Advanced Study. Dr. Blackman has previously served as Chair of the Mathematics Department and Dean of the School of Science Health and Technology at Medgar Evers College, where he has worked for almost thirty years. He graduated from Queen’s College, Guyana, Brooklyn College, CUNY, and the City University of New York Graduate School. He is the Founder of the Guyana Business Journal & Magazine.

Utamu Belle is an award-winning Guyanese journalist with a career spanning over a decade. Her experience includes writing for print, television, and online media. She has worked as a Radio and Television host. She is the Founder of A-to-Z Media (Guyana) and a News and Digital Editor with Upscale Magazine.

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